tv Bloomberg Surveillance Bloomberg August 27, 2014 6:00am-8:01am EDT
to pronk attack meets kiev resistance. multi-p[rongeronged attack meets kiev resistance. good morning, everyone. this is "bloomberg surveillance." wednesday, august 27. joining me, scarlet fu, brendan greeley. adam johnson is out for the week. we need to get to a morning brief. bonjoure. >> french manufacturing confidence fell to a low. managing director of the imf, christine lagarde, with further charges of negligence. >> you were saying this is not a surprise. >> it has been floating out there, but now it is finally charges. >> i would argue that that news is the least of the problems. >> i would agree. she said she will not resign.
continue on. the u.s. moving to we will take a look at mba mortgage applications. earnings before the bell. tiffany's, michaels, express. >> more retailers. >> more retailers. here is one item to note. anti-aa college football season begins today. labor negotiations began last week. tiffany's will be interesting because of the japan influence. >> absolutely. >> i find there to be a big asterix around it. >> substitutable goods. >> yes, they are. let's do a data check. stocks, bonds, currencies, commodities. 2002 was the closest. 500.on the s&p there is the vix.
the dow well above 17,000. was really smart on this yesterday. flatter yield curve, higher two-year yield compared to what you -- to a lower 10 year yield. let's go to the other side of the world. versus south korea. here is the asian crisis. this is ugly korea. japan does better. this is the churn. stronger yen. this is the abenomics pullover. this is really moving. stronger korean. this profoundly affect south korea. theou can just look at success of autonomic's. we need to qualify it. -- you cannot just look at the success of abenomics. we need to qualify it.
to the point of a quiet august, there are a lot of things going on out there that affect the world over in asia. koreanmuch more the economy is in the japanese economy -- that is a slow rolling story that is hitting us in a surprising way. >> sam grobart will join us in the next hour on illness in the senior leadership of samsung. a busy day on the front pages. here is scarlet fu. >> we start off with markets. rallies around the world. >> should i get out of cash? >> maybe not. stocks are now valued at $66 trillion. they have added $2.2 trillion since august 7. remember the correction we had? >> stocks are about four times the american economy. as a rough estimate. >> you showed us of the s&p 500 pushed to its record.
>> brendan, tell us about brazil. brazil is part of this equities surge. --what is happening brazil in brazil is that investors are hopeful there will be a change in leadership. much like in india. the current president is seen as a continuation of what her predecessor did. restrictive inry terms of what companies can do. >> and it is her fault they lost the world cup. >> it is not her fault. if you want to get into that, i have a soapbox. >> to we have an extra hour of "bloomberg surveillance"? [laughter] >> what you see with stocks moving in brazil is the hope that she will lose the presidential election. >> our next-door it. >> a quick wrapup of geopolitics. ukraine and gaza.
prospects for more. -- for more airstrikes against the islamic state. have the contract between two side starting talks about political resolution with battle still taking place on the ground in ukraine. >> these images of suits and ties meeting against multiple battles and many dying in eastern ukraine. >> you have guys at a summit that is not a summit's order exchange. we are not sure what is getting accomplished. i love hearing putin say he is an active partner for peace. [laughter] >> give us a more geopolitics. >> israel and hamas agreeing on an open-ended cease-fire. hamas is claiming that we have one. -- won. israel is demanding that gaza be demilitarized. account of truces is nine.
peace,he game theory of this is the hardest thing for israel to accept. they have to offer what looks like a densely a victory of hamas to get peace. look seven monday, as we see celebrations -- as we looked at on monday, as we see celebrations in the gaza strip, we have syria. >> the u.s. is putting hillary coalition -- together a willing against the islamic state. u.k., jordan. >> what does that mean? >> it is not a nato action. we are doing what we have gotten used to doing over the last decade. figuring out what we want to do and finding a couple of partners
with us. >> with all due respect to our military, its own sake is spielberg movie. last sounds like the decade of american foreign. >> coalition of the willing. >> that is not what the president is calling it, however. >> richard haas writing this morning. we have another story. boys, get ready. apple is preparing to come out with its biggest ipad ever. they will make an ipad with a 12.9 inch screen. the current ipads have an eight inch screen and a 10 inch screen. that thisointing out is part of the whole incrementalism that apple has evolved into. >> it is a proud lack of innovation. this feels like they were sitting round and were like, make it bigger. idea?you buy the
>> it is not just apple. they have shifted away from consumer alert products -- electronic products. >> i don't understand how the bigger screen is a part of that. >> you need bigger for spreadsheets. >> i have seen to ipads fault on -- off fancy bars and break. >> not with the sapphire glass now. biggerhire glass and screens. >> tom, that says more about our you spend your time than about the ipad. hardback books? >> i read dickens leather bound. >> those are our front page stories. >> i have a twitter question. this has been a huge success.
they said, let's put up a twitter question. i said, nobody will respond. i was wrong. our twitter question, what would you do with a bigger tablet? you samsung people can tweet in and tell us that you will throw it out the window. who says tablet? >> samsung says tablet? >> ipad, apple does not. our best host for the hour is joshua wright. writing for bloomberg briefs. let's talk about the linkage of corporate earnings into our economy. say the market just better economy is ahead? >> not necessarily. the fed has recently been talking about traditional ratios. the fed has been saying we're within historical norms.
don't worry about the stock market. we have been looking at other things. what we found is that although on the earning side, things look pretty good, other things do not look as good. >> we hear and investment. -- cap-ex and investment. investmentot seeing in the capital stock that creates our ability to be productive. >> and creates jobs as well. >> i wonder what the fed thinks we are seeing inequities overall across the world. do you look at that and say, this is indicating complacency? there is too much froth in the markets? >> i think there is concern about that. janet yellen has been pretty clear that she is not going to focus pretty much -- as much on
that area. nobody said -- he did not target specific sectors. >> did you study with schiller? >> i did not. she is very transparent. she is keeping it real. >> she's keeping it real. [laughter] >> we will look at real estate later in the hour. right now, let's get your company news. >> for those of my be traveling isn, american airlines fighting over a new contract. they will drop orbitz for now. general motors grows and tennessee.
hill willin spring grow. it is already home to the chevrolet equinox. wesson slashes its forecast. the reason? declining demand for guns. that is the company news. >> coming up, vladimir putin calls talks with president poroshenko positive. we are also positive that there is fighting in eastern ukraine. we will talk to hans nichols who is just back from minsk after the break. it is "bloomberg surveillance" on bloomberg television. streaming on your tablet, phone, and bloomberg.com. ♪
"bloomberg surveillance." glenn hubbard is the dean of the columbia university business school. look for this on "market makers." he is always interesting. always controversial. is "bloomberg surveillance." i'm tom keene. joining me, scarlet fu and brendan greeley. adam johnson is rumored to return before october. >> he is doing his maverick tricks. >> this is is on russia. >> russian president vladimir putin rett with ukrainian president -- met with ukrainian president poroshenko. he called the talks positive. fighting continues on the ground. fromnichols joins us berlin this morning. we set up this contrast between fighting on the ground and the
diplomatic happy talk that has emerged from the meeting. did each side get with they wanted? little sides got a progress. both sides were forced to me with each other. one note of caution on what seems to be the optimism this morning. yes, there are going to be further meetings. poroshenko did not get a continuation of the talks into today. his meeting with putin went about 90 minutes, by my count. progress, but not a lot. >> european union officials were at the meetings. what kind of role do you expect them to play or are you hearing they will play in the months to come? >> they will be part of this contact group. russian,e ukrainian, and european union officials as they try to have some sort of cease-fire that could eventually lead to a long-term solution. is the problem. petro poroshenko was
democratically elected. he has elections at the end of parliament. >> here is my morning must-read, folks. the russian public's natural reaction will be to rally to their leader. support for putin, though broad, may not be deep. it is support before, not after, the debate about the cost of putin's policy has taken place. what was the backstory on mr. putin's support in this? feels veryn solidified and very supported by his people. after the depth of those polls and how solid that support is, it is often a tough question.
right now, his support is stratospheric. >> no matter what happens in ukraine, security policy has changed for good. finland made more noise is about the possibility of joining nato or getting closer to nato. is that is huge of a deal as we think it is? >> these are very real steps from finland to join the european union -- to have nato troops stationed on the ground. most trade with russia of any european union company -- country. it is significant they are doing this. it will antagonize russia. length of thee california coastline, the border finland shares with russia. they feel vulnerable. sweden has upped their defense spendings. sweden wants to spend more on defense as a direct result of the actions in ukraine and crimea.
>> nice job linking all that together. hans nichols giving us a bit of --eography lesson, giving us showing that altar was. stocks rallying. iz ann sonders will join us as guest host in the 7:00 a.m. hour. this is "bloomberg surveillance." streaming on your tablet, your smart phone, and bloomberg.com. ♪
former republican as their nominee for governor. charlie crist won the nomination. he will face the incumbent governor this fall. an american journalist has returned home. he was released in two days ago by syrian extremist group. he was in captivity for 22 months. he is back in boston. christine lagarde says she has been cited in a french corruption investigation. she is accused of negligence and a case that dates back to her time as finance minister of france. she does not plan to resign as -- from the imf. up onave to read negligence in france. >> in france, it means that she failed to have an affair. >> i don't know the exact
details on this. >> i'm intrigued. >> she erred in agreeing to and the arbitration -- and the arbitration. >> i think it is a different organization. >> she laughs at my french. that is what i know. [laughter] >> what do have for us brendan? >> martin wolf the cup on the idea of shareholder value this morning. -- picked up on the idea of shareholder value this morning. we talked about this a lot yesterday in the context of burger king and tim hortons and the justification for these inversions is that you need to maximize shareholder value. that is seen as a truism and
accepted. has that idea run its course? are we ready for a more complex idea of corporate governing? >> i think we're way overdue for a more complex idea of corporate governments. working school started on ethics courses. we are still struggling with it. it is an age-old question. how do you manage other people's money? >> could this be solved by teaching mbas better ethics? >> it depends on how you define teaching. largerteach them in a culture of being ethical, then yes. >> i would respectfully said that martin is doing academic navelgazing. doing with cash flow? the major number with burger king is they generate 140% of net income as free cash flow. that is to die for. >> the point is that martin wolf
is making is that you have to look past that. >> they are not, is my point. >> the room more obligations beyond -- there are more obligations beyond financial. just because you are a shareholder in a company does not wash you of all obligations. >> brain freeze in august? continues.ate we will discuss how equities are rallying. the s&p 500 is above 2000 after positive economic data. what is the data telling us? that conversation is next on "bloomberg surveillance." ♪
>> good morning, everyone. "bloomberg surveillance." welcome back. tom keene with scarlet fu and brendan greeley. adam johnson is off this week. let me do one more data check. the euro gets my attention. much weaker earlier this morning. still very important. a quick "surveillance" correction. thinking of a book by benjamin friedman of harvard university, "the moral consequences of growth." harvard wasedman of
my brain freeze for this morning. let's get your single best chart. no brain freeze there. >> it is un-american shrinking wealth. onhave been -- it is american shrinking wealth. the assetsen from owned by different u.s. households. starting want to thousand one, american families but increasing amount of wealth and housing. they took on more debt. that came at the expense of other kind of investments. if you look at what happened since, the peak was 2007. the valued -- 2010, of the housing market has dropped off. >> what is so important there on the right side of the chart, you see the decline in the yellow bar which is the pain and agony on housing. what is far more important is the decline on the two blue bars over to the right.
that is the equity markets. brendan greeley, if you went to cash in 2009, you cannot catch a certainare over age. >> you keep talking as if i have any cash to do anything with. [laughter] that highest yellow bar, that is one about a house. important isis is because this affects the middle class the most. >> disproportionately. >> if you are rich, you have lots of money to diversify assets. if you are poor, you are much less likely to have a house. the second you have some money to invest, you stock it in real estate and you put your whole portfolio in one asset. to the does come over tax differentials here versus europe. you mentioned this in europe. there is a lot less homeownership in europe. >> in germany it is 44%.
>> here it is higher than 70%. exceptionalot that to other countries compared to >> is thisip to rid cultural or driven by taxes? >> there is a huge policy component. americans have been grossly over encouraged by a variety in policies to over invest in housing. it is over concentrated. there is no question. joshua wright looking at the entire span of the american economy. what did you learn about the cultural aspects? >> the cultural aspects of the debt? >> you are a loser if you rent. you are a loser if you don't own. but etc. know why this is considered to be an american dream. the we left behind our hands.
don't know why this is considered to be an american dream. don't we laugh behind our hands? >> my hair does not go great, it disappears. i have twins who are turning five. >> will they rent or buy? >> of god. can we get them through college first? >> get them through kindergarten first. [laughter] you are dead on about this, scarlet/. have put whatever money we into housing and then we kill ourselves over keeping the money there. >> people like to put money in , theng and the real issue thing that i notice is that home
equity is declining, but home debt is not. we are at little overall thomistic about the process the consumer has made. optimistic about the process the consumer has made. does it harm us? >> i think we have already seen a lot of that in the last year. that is why we have such a soft housing market this year. >> something you wrote really interested me. we all talk about how the household has improved quite a bit. you say that is a misnomer. that is not the case. >> we are about 50% of the way there. sincee made huge progress 2012. we are not there. i don't think consumers are basically done. >> wage growth.
there is a school of thought that wage growth will click in. there is another school that says, forget about it. >> i thinking -- keep thinking back to the capital share of the gdp at an all-time high or very high. i think that seems like a significant statistic we should think about. a question ofust the consumer balance sheet, but the consumer thinking she. you don't have that equity in your house, you have the income. you will not have the ability to trade up. the lack of moment in the housing market. is a conversation of the haves. >> trading up? >> yes. -- a lot of people these people are trapped under student loan debt. the story of the last decade was mortgage and overhang, which is still with us, unfortunately.
on top of that, you have student loans, so people can join the housing market. >> reject ahead for us what that means. -- project ahead for us what that means. how do you factor then -- that in for the economic outlook in five years? >> when you look at how it is concentrated in terms of demographics, they are crucial for household formation and the housing market and consumer growth is much more a concern in that 5-10 year horizon. >> this goes back to something that "business week" said. maybe people just don't make enough money. i felix story after story is coming back to that. -- i feel like story after story is coming back to that. >> to you look at america as a or with wealth and the
quality, income and ecology, -- income inequality, have we become the haves and the have-nots? >> that is the danger. if we take a serious look in the mirror as a country and think about, what do we need to support the broad middle class? we can have 20th century growth without 20th century style balance sheets. what do you need to try to have? that is my note for the day. 20th century growth and 20th century balance sheets. >> josh wright is our guest host for the hour. he is a chief economist here. coming up, restaurants across the country closing because of soaring real estate rents. how they are pushing back and ganging up for the food hall revolution. we will discuss on "bloomberg surveillance." ♪
it is "bloomberg surveillance." good morning. let's get right to work twitter question. what would you do with a bigger ipad? i can't use the word tablet. >> 13 inch screen. >> what would you do with a bigger ipad? we have a lot of responses. mini.uy said, i like my stop it. it is like over a foot. [laughter] adam johnson is reported to return in september. brendan greeley has a top headlines. >> an american citizen dies fighting alongside isis. douglas macarthur mccain, try that name on for an islamic militant. he was raised in minnesota. he was 33 years old. detroit's our collection, they are figuring out what to do with it.
it could act as collateral and improve the picture of funding. the city must use the artwork as collateral. reviews for the bankruptcy filings starts next week. a man worth the $99 million. who is it? you know who it is, tom. manchester united is paying $99 million for the rights to angel di maria. they are looking for a turnaround from a mediocre begin to the season. >> i've never heard of that player. >> you've heard of manchester united, right? >> yes. >> think of them as the yankees. >> is wayne rooney still there? >> he is. >> to they do like derek jeter? >> it is called the farewell tour. it is all good. like 14 >> in a
row. yes, i'm well aware who jeter is. that blocks airline seats. it is called a knee defender. womanenger presented a from reclining hersey. one passenger through a couple water at another and the pilot had to make an unscheduled landing as a result. >> of this is insane. later on, the site crashed from traffic to read the air carriers will not let you use the device. >> this is like a physics problem. you can compress molecules in space and eventually they begin to heat up. this is predictable. on the transatlantic flight, the guy behind me did not need a knee defender. he was a little old italian man
who kicked the back of my seat. it was so much more effective and efficient. hit them as soon as big, fat fine. >> it is another way for the airlines to say pay up a little legroomr the extra seats. >> the photos are extraordinary this morning. policeman who is being set on fire with the molotov cocktail thrown by an antigovernment protester in venezuela. againstests are fingerprinting by the government to prevent smuggling food. >> i'm glad we do this. venezuela has been pushed to the side with all of the other geopolitics. i would suggest that if this other stuff was not going on, venezuela would be front and center. a palestinian man blows fire
as people celebrate the cease-fire. >> did the israelis celebrate? >> i don't know. it is a good question. a good question. hamas did declare victory. >> in order for israel to get these, they have to allow this to happen. an open-ended cease-fire. >> the number one photo. here you have vladimir putin on the left and moving down the staircase is catherine ashton, the former policy representative , belarus, and petro poroshenko. this is a sending a staircase to something. it is putin thinking about and that? >> what is going on in his mind? i would point out that in the
last 24 hours, the herb and 225 killed in this fierce fighting going on while these guys are waltzing. positive,eaway was right? >> it was positive. i like vladimir putin gets to be positive about helping solve the problem he created. >> absolutely. those are our top photos. coming up on surveillance, "the food truck era is over. we will talk about the next culinary trend. this is "bloomberg surveillance." streaming on your tablet come tablet, yourn -- smart phone, and bloomberg.com. ♪
it lets film and television studios create enhanced scenes. terms were not disclosed. facebook announces another app. it is currently available on ios only. that is today's company news from the files of bloomberg west. >> food trucks are so 2010. food halls. easier tocheaper and open an actual stationary restaurant. jonathan butler is the cofounder of smorgasbord. it is based in brooklyn, like all cool things. jonathan, how is this cheaper than a truck? how are we seeing this movement from a truck into a place? truck, the owner of
the food business still has to pay for the truck. we did all the buildup for this. there are permanent seven day per week spots for our vendors. we cover capital costs. they come in and pay rent. >> the food hall is not a new idea. in every mall in america, there is a food court. what was broken before that you needed to fix about this model? >> i don't need -- think it was broken, but it was the expectations about quality of food have risen. if you go to shea stadium or the u.s. open, everyone is expecting a higher level of food. for six books, that need is declining. so i can go into your place
with no capital and get up and going? grew out ofrg the brooklyn flea. like to say is a think we have become the biggest small business incubator in the city. .e have over 100 food vendors for under $1000. fuscarlet fu sets up doughnuts and four $1000, she is in. >> oh yeah. >> why are we seeing more of this? >> it is hard to do. hard thinglace is a to achieve because you need buyers and sellers. brooklyn flea got very popular in 2008 and we saw a lot of imitators out in brooklyn.
it is actually very hard. calledlso started a blog browncenter.com. i was able to leverage that early on a launch it into the market. i was able to get buyers and sellers early on very quickly. >> with the food halls, do you have a regulatory problem? although the startup costs are low from your end, in order to sell food, you have to make it in a licensed kitchen. are you going to try to work to make unlimited quantities of food at home? to change that regulation? smorgasburgs at have some authority in the food industry. they have a friend at a restaurant and the use of from 6:00 a.m. to 10:00 a.m. to make their stuff.
for $10 or $15 per hour, you can make stuff that a lot of these kitchens. >> can you take this team also run the country? can you? >> >> [laughter] i'm not sure. you are seeing in in other cities, for sure. union market in washington dc opened last year. there was anyone in anaheim. los angeles has a food court. san francisco and seattle have had these. this is not new. the idea of going to a place with a bunch of different food vendors is not exactly new. i think the arches in all food element in general -- artisanal food element in general speaks to a younger generation. want to spend on stuff rather than products. >> millenials have been reading the research and the new york
times and all of the other publications and it is showing. >> i like telling use say younger generation, we all look eagerly to tom. [laughter] >> i have to ask you about sharing resources. brendan brought up food courts. every food court has its little area and you have your own dishwasher. in the food hall, they are sharing resources that we have not seen before. >> like most things we have done, we have made it up as we have gone along based on common sense. have built for individual kitchens, where everyone has the run grill tops and ovens. they share resources in the back. storage, sinks, prep space, that kind of thing. time are running out of and we are all taking a field trip to berg'n this afternoon. [laughter] >> thank you very much for coming in. >> let me do a forex report.
>> fighting rages on in eastern putine as wooten and -- holds inconclusive talks. he up resistance. the great assumption. equity surge on belief. limited accommodation. oflook at the age old debate career versus family. we look at how technology and eggs can be frozen. good morning, everyone. is wednesday, august 27. i'm tom keene. joining me, scarlet fu and brendan greeley. perfect time to talk to liz ann sonders of charles schwab. we look at news and technology. overnight in france, manufacturing fell to the lowest in 13 months. in august, not surprising.
the economy is going to continue to struggle to grow. economics they in -- day in the u.s. -- >> an increase of 2.8% last week . this number tends to jump around a bit. >> earnings looking at before the bell, michael's and express. ncaa college football season begins. >> with the effect of japan, a falling 3%.s great challenges over there. comparing japan with south korea s interesting. let's get to company news. >> we start with airlines.
american airlines pulling shares from orbits. -- orbitz. general motors grows in tennessee. if the automakers expect it to announce new vehicles and jobs at its plant. this is likely to get new cadillac and gmc vehicles. apple readies its biggest ipad ever. suppliers are preparing a new model with a 12.9 inch screen. production is likely to start early next year. that is the latest company news. --who do you talk to apple who can we talk to apple about -- >> you have talked to apple's upper management. is this really an innovation?
there is a desire for a diversity of sizes. in the end, you want to have a product at every spot for all of those small slices of consumers. >> you did the iconic article with what i'm right here. it was a great article. is this part of the plan? this doesn't sound like mr. jobs. they areroducts, but premium products. we are not seeing a lower price ago,egy, which one year there were wondering, do we have to go there.
that diversity at the upper end makes sense. >> are they cannibalizing their products? would you buy a giant ipad? >> my kids would drop it. it is for people who like using a laptop. >> macbook air has been doing well. sales have increased last quarter. sales of the ipad have gone down, which was surprising. perhaps adding a new model at a larger size wood pick up that business along the way. thatven't you been saying a tablet is not a laptop? >> am not sure they will pursue the same strategy as microsoft with their surface. apple believes in the sanctity of product categories. a larger tablet does not necessarily replace a laptop. >> i want to bring in liz ann sonders.
this is about american entrepreneurial spirit, which we completely misjudged this equity market. companies adapt to a marketplace. >> it's not just the normal of high tech. happening in the industrial spirit energy. has an impact on the u.s. economy and global competitors. our ability to fight back on geopolitics. livesody does what sam everyday or brandon lives everyday. >> people are underestimating the power of innovation. >> what a country. did you get any sleep last night? apple -- excited about
were you so excited about apple? sonders i feel like i'm always -- >> i feel like i'm always wrong about this. i was wrong about the ipad and twitter. i understand that you need a broad range of sizes. i don't know what you do with the size. .> neither do i >> does ibm know? >> it does seem to have an even brighter future than at the consumer level. >> people are splitting between a smaller and slightly larger mobile device. for a warehouse, large office, having that simple touchscreen this play is reasonable. -- touchscreen display is useful. as long as you can fit it in a briefcase.
>> let's go to our twitter question this morning. what would you do with a bigger tablet? let's go to the equity markets. maybe you sold in may of 2009 like me. of charlesders schwab has been a consistent and relentless voice for participation in american stock markets. 17,000 on the dow. is it time to get in? how do i have confidence today? >> go back to the basics of the relationship between earnings and stock prices. the does go are very highly correlated. if you track the two, the bull market has more than enough justification from an earnings perspective. pe's are rising.
you have a unique environment where both are coming up. >> the dow adjusted for inflation. you can see the boom of the 1990's. i will send this out on bloomberg radio plus. how do you respond to charles schwab customers who say, high.ion is too we have to go down. >> i would like to see some. it would be healthy for the market. as long as by the way should a reasonable -- valuations are reasonable -- they tend to go in a pendulum. earnings growth is accelerating again. you have the power from the denominator happening. we have rallies in u.s. equities and global equities and also rallies in government bonds here in the u.s. and europe. stocks and bonds are gaining at the same time.
>> it is pretty incredible at the first half of the year. with the exception of the u.s. dollar. yet, the west dollar has picked up a lot of momentum this year -- u.s. dollar has picked up a lot of momentum this year. soon, we will see correlations come back down, which would be to the benefit of global diversification. there starting to see coupling in terms of global economies and emergences and monetary policy. -- decoupling. on now, it has been a risk all in environment. >> mr. buffett stepping in with a a percent coupon. -- a percent coupon for burger king and tim hortons. >> topline growth has been in the mid-single digits. that is perfectly fine in order to get to double-digit gains.
the margin story is still not over. the margins probably continue to excel rate in the next year. which is against the consensus that there is no way that margins can go higher than this. i think margins will continue to surprise. as far as m&a, we are getting to the point where it's going to be uy.aper to build than b we will have the report on samsung. equity markets driving higher. was the -- the euro story this morning. a weaker euro. >> the presidential elections in brazil. we will discuss. ♪
>> good morning, everyone. "bloomberg surveillance." i'm tom keene. adam johnson is off until september. >> the city of chicago is betting big on big data. rahm emanuel has given the greenlight would project that will install metal sensors on the city's street traffic poles to collect data. it has some privacy groups concerned. is with us. this sounds like a fit it on
lamp posts. >> it is taking the city and looking at it as a machine and putting diagnostics on that machine and looking at everything that's moving through it in terms of air, heat, noise and people come up measured by the signals coming off of their mobile devices. >> what does the city plan to do with this data? >> it will be available to the public on a web portal. developers and programmers can access that data to hopefully create new apps and the city itself can use that data to deliver services more efficiently. >> you spoke with rahm emanuel. >> i did. please talk about -- we talked about that effort in the city to attract more tech companies and the jobs they can create to the city of chicago. >> we realized we could do something proactive based rather than reactive based. how do you get ahead of it? we sat down and we looked at
that activity they are doing in the city and we also talked about the incubators and accelerators and the other things the mayor has been tried to push forward in chicago, taking advantage of all the people there and all the universities in the general area. 2008, there was a lot of talk about making the federal government and open data portal. our cities doing a better job of this? >> they seem to be doing a better job because they have a more defined area of information to work with. they are the laboratories of democracy or government technology. they're saying we are going to try to avoid the missteps by keeping everything along the way as open as possible. if there is a problem, everyone will see it. >> is there any precedents for this? there hasn't been anything
concrete between the president and vladimir putin. theo curtis has returned home. he is back in boston. in a french corruption investigation, she is accused of negligence in a case -- she does not plan to resign. take is this is older news. it has finally come to fruition. >> she didn't seem very surprised about it. >> no, she did not. i think it's important to underline that she is in good with the imf. the fed and ecb, they take a hard look at their models.
they have done some responsible work in the last five years. she hasld suggest that delegated authority at the imf. i have seen her in the room with olivier blanchard and they are not like subservient. these guys are the pros. let them do they want. will tell youitz that these organizations are not hard to run. >> we have to talk about international organizations. what would be brazil. >> we have polls in brazil that shows he might not win reelection. on that news, the companies are ok with losing him because of silva.try of dilma who is marina silva? herhe used to be
environment secretary. she has a story that makes her a nightmare for the pt. of lula.ts that severe survived through childhood hunger and illness. forecome a figurehead brazil's movement. >> she is seen as more business friendly. how is that possible? her position as a busiest -- a business friendly candidate when she joined forces .ith compos
campos. was an extremely business friendly governor. some of that has rubbed off on the silva. -- on mrs. silva. >> the economy has flatlined and -- is this an election being held within a recession mentality? points. are two on the one hand, when you look at the gross gdp records, they're likely to show a contraction in the second quarter. facing an we are economic difficult
situation. however, when you look at the vast majority of the electorate's, the poor part of the country, their wages have been rising. unemployment is still at an all-time low. about 5% or under. comes to the producers, hat we are-side, w seeing is extremely weak. if the voters are not saying that. >> investors seem to be ok with losing -- who do they prefer as the candidate to be put forth? leadersyou ask business , the elites of the country, if you will, the traditionally leads, they are firmly in favor of the candidate of the center-right.
brazilian social democracy party. he has extremely good track record as governor of the third-biggest estate in brazil. whose policies campos mimicked. there were huge affinities between them. that in turn makes it extremely important for him to differentiate himself from silva and to demonstrate her lack of managerial experience, which is something he has in spades. thank you. >> coming back, when the clock is ticking, do you choose career or family?
>> this is "bloomberg surveillance." let's get you started with some company news. radioshack looking for a rescue. the electronics retailer was to stave off bankruptcy. they are in talk with -- about a cash infusion. the company will face a cash crunch last year -- next year. best buy hopes new gadgets will look -- will help and its slump. nd its slump. smith & wesson cutting its full-year sales and profit forecast. -- theg demand for guns reason, declining demand for guns. ourhis matters now, to
guest host. liz ann sonders. she is focused on the dollar. .urrency strength is good maybe not for the have-nots. it is underpinning to long-term. we talked about improved energy efficiency and access in the --. and the renaissance industrial renaissance periods helping to improve the trade deficit. less supplyoping and more demand. >> the winds behind the back of our multinationals. >> admittedly, you get a bit of yougative hit to earnings
have a stronger dollar for some of the multinationals. much more broadly, it is extremely positive for the u.s. economy and the market. pressure on commodities. if you look at the relatively long history of the stock market, back to the mid-1970's, you look at every bull market, the stock market has done twice as well in dollar bull markets. who understands that going down 18% is a normal investment occurrence? it seems as if this concept is -- >> people used to understand it. we are so conditioned to the last dose co-experiences and the muscle memory of the fear -- the last dose co-experiences -- the two experiences.
long-term investments. there are saying, fine, enough with the buybacks and dividends. now investto long-term for the future health of the business. >> do you really believe that? we are going to see that boom >> . most of the leading indicators are starting to line up. if you look broadly across fixed investment, it is at work close to an all-time record high. yearsread in the last 10 as a percentage of corporate cash going back to buybacks, it has tilted way too much in favor of returning cash to shareholders. we will start to go back to a spread.mal >> the s&p 500 closed above 2000 yesterday. we might just open
slightly higher. the 10 year yield coming down. that rally in equities and bonds continues. an 11 --ding near this is "bloomberg surveillance." i'm scarlet fu, here with tom keene and brendan greeley. our guest host for this hour, liz ann sonders of charles schwab. the age-old debate of career versus family for women is being disrupted. technology that allows us to freeze our eggs has gone mainstream and may just free our careers. -- founder and ceo of a bank egg bank joins us now. has been around for 30 years. it has only picked up in the last few years. what has changed? are two catalysts that
have contributed to the surge. new technology called vitrification, a flash freeze process. the eggs have a greater chance thaw.urviving the the fertility industry has now proven that success rates are identical to fresh eggs. your company connects women to fertility clinics. you negotiate bulk rates on the procedure and the storage to bring down cost. how does that change the $10,000 price tag? >> there is a 15% savings with egg bank. as well as financing opportunities. costs can come down to $350 per month. you have really look at the
behavior of the structure. >> one is the medical advances making it possible. the other is social things happening in america that is making this more popular. womens being driven by wanting to delay their careers or couples deciding together they are not ready for children? for women wanting to delay it altogether. >> we know there has been a 900% increase in women having their first child over the age of 35. that increase is directly tied factors youomic just mentioned. we are seeing couples who want to freeze embryos because they are not ready to have children. >> that is really important. >> as well as the professional woman who has a lead of career choices and is traveling quite a bit. the other reason is, they may be haven't met the right part.
-- the right partner yet. >> i have two teenagers. i went through the experience of in vitro. hownt to ask you about insurance relates to this versus , say, 20 years ago. i was fortunate that insurance covered most of the process. play, that coming into especially given how different health care is not? different health care is now? >> traditionally, ivf is a self a business. what hundred percent of the --cedure is not paid for 100% of the procedure is not paid for. thenember hearing back that what was most important in the whole process is actually the technology of the lab.
the biggest change from when you , the newt through it flashplease -- freeze process. getting almost 100% of those eggs or embryos that you froze 10 years ago, that dramatically affects it. that did not exist when we went through it. >> what needs to happen for this to become a routine part of women's health? women need toge know that it's accessible and affordable through companies like eggbanxx. we are hosting these freezing parties. helping educate the consumer. >> thank you so much.
adam johnson is rumored to return at some point. not quite sure when. futures flat. dow futures up 11. extrapolatingt out to one gazillion dollars. scientific notation. >> are you high yet? high valuations. >> i get it. my 14-year-old daughter has to be $4 billion worth of the valuation. >> we have seen this $10 billion looks like a pretty smart guy for rejecting the offer from mark zuckerberg not too long ago for $3 billion coul.
we will be talking a lot about this. whether these valuations will go higher and higher. >> what is the distinction of a snapchat versus the other apps i never use? privacy, the ability to send a photo and have it disappear after it's been read. >> what when super global a few months ago? >> they all get really exciting and then disappear. there is a certain premium being placed on the disposable information people can traffic. >> liz ann sonders of charles schwab is next bert -- an expert on snapchat. >> i don't use it. >> your children do.
>> part of the reason they like to use it, they do believe it is disposable. it can take screenshots very quickly. my daughter has found that things are coming back that she did not think would. >> i know you're old enough to have been on fenster. iendster. is there any indication that we have moved past this rotation? are our valuations tied to anything other than this rapid use? >> i don't think so. people testing the scale these operations are able to move in. and the numbers of people they are able to collect. they start looking like a giant turkey in the cartoons. >> snapchat has no advertising.
>> where were you when apple was $400 a share? buy it now. he will join us tomorrow with apple about $700 a share -- above $700 a share. he is a value growth kind of guy. >> this is "bloomberg surveillance. i'm scarlet fu. our guest host, liz ann sonders of charles schwab. we start off with company news from the files of bloomberg west. snapchat closing in on funding that values the company at $10 billion.
that is according to a person with knowledge of the matter. the funding alleys snapchat at three times what facebook offered to pay for it last year. google expands its cloud-based offerings. startup.uying a boston the terms were not disclosed. app --tandalone instagram hyper lapse. it is currently available on ios only. investors have been waiting for it to monetize the purchase. >> interesting. i use a lot of time lapse. scarlet. to quote investors have been waiting for it to monetize. that is the story of the last 10 years in silicon valley. >> it certainly has been. we overlook that right now.
let's move on here. it's a slippery slope for samsung. it getting the squeeze on the high-end from apple and xiaomi on the lower end. well.obart knows samsung thecan tell us a bit about -- >> he is the son of the current chairman. he is 46 years old and currently the deputy chairman of samsung. --has never given a record and on the record interview to the press. he was educated in korea, japan and the united states. he is fluent in all of those languages and he is going to have to become the person who takes samsung into its next chapter when his father, who is currently ailing, dies. >> he's the only samsung executive who is invited -- was
invited to steve jobs's pick-and-roll. >-- funeral. samsung has been a major supplier to apple. he brokered a lot of those agreements. from thisding a quote mornings bloomberg article on succession plans. everyone has always known that he would be the next emperor. he has never had to prove anything. emperor? >> it's a company that is now going to be moving to its third generation of family ownership. it has been the second generation, the current chairman, who has made samsung into the modern glad that is. there is a significant reverence for him. being a family controlled company, it will flow to his son. the level of reference is it to -- akin to
jobs at apple. >> to new strategy was decided 15 years ago. >> some of this is cultural in terms of the respect for the past and elders and trying to ceremony lies that. lialize that. >> after three and four quarter sses, their stock prices are lower than apple computers. to they have any interest in american is digital shareholders -- american institutional shareholders? >> the company has not been run -- the u.s. focus on shareholder return is not at the core of how something operates -- samsung operates.
be the mostng to connected technology and other business conglomerate. largest of the legacy tribals in korea. >> explain what that means. >> after the korean war, the country has nothing and the government decided to organize and provideustries loan guarantees to those companies so they could develop. as a result, you have these very large conglomerates. ge times five. businessesvolved in come everything from shipbuilding to electronics to insurance to real estate construction. >> when they make a galaxy or the next new galaxy or whatever, doesn't listen to customers -- and doesn't listen to customers -- does it listen to customers? >> apple is about knowing what the customer wants before the
customer does. samsung is quite the opposite. samsung says, we listen to the customer. we go out and research. we make many kinds of products because we are not quite sure what is going to take off, so we want to be everywhere. >> one of the biggest difficulties of korean companies is adapting to the app model. they could make good hardware, but they have found it hard to make software. >> they have been trying. they have a big operation in silicon valley. it has been an interesting between thehange engineers in silicon valley and executives in korea. how those two groups have been able to work together. they seem to be moving forward on it. it hasn't quite born free. >> let's get to our agendas. plushenko and merkel talking
about further talks. their war in eastern ukraine. we have downplayed this to suits and ties. there is real warfare in eastern ukraine. we have to stay vigilant on that. >> you have to head over to the radio studio, tom. we will take the reins here. >> i'm looking at the white house's attempt to put together a coalition to attack the islamic state in syria. the american military has tremendous capabilities, but for a sustainable solution, we are going to need effective partners. contribution -- they want help. they are trying to figure out how to do this without doing it alone. >> i'm focused on the markets right now. -- you 500 closed above say the nasdaq is the next big
milestone. important.the s&p is retail investors are focusing more on the dow. every once in a while, a threshold like that corresponds to an important technical level. if and when the nasdaq hits the 2000 tie, that is a big deal. >> let's get to our put a question. -- twitter question. what would you do with a bigger tablet? museums and education would be the perfect place. that make sense. >> it does. i like old museums. redone now and they have the exhibits with interactive touchscreen displays and stuff. i like a stuffed moose. >> dinosaur bones are awesome.
>> you don't need to see the boat is moving on the screen. >> a bigger tablet will make us when i have to watch live soccer on it when the girlfriend hogs the big-screen tv. >> i wrote that one. i thought small and transportable what the future. why are we going large again? businesses might have a different use for it. >> people talk about the third and fourth screen. we may be moving into a world where there may be seven or eight screens. >> counting tv? uncomfortable. tabletll buy the bigger and use it as a cutting board. >> liz ann sonders, thank you so much for joining us.
i am betty liu. we have a lot ahead. the telecom industry has had it rough -- cisco announcing more cuts. we will hear from the cisco top lucent.or alcatel an exclusive with the ceo. chicago mayor rahm emanuel tackling the city's problems with data. we will check in. tiffany's is bringing in a new top designer to give the company a makeover and she may toss those boxes, ladies. apple might be preparing to make its biggest tablet yet -- 13 inches. sales have fallen in the last two quarters. a new funding round for snapchat at $2value the start up